Written by

Nathan Bomey, John Gallagher and John Wisely

Detroit Free Press Business Writers

Proposed regional water authority

■ A new Great Lakes Water Authority would lease the department's assets from the city, paying about $47 million a year for 40 years. The city would become a wholesale water customer of the authority. ■ A nine-member board would run the authority, with the City of Detroit and Wayne, Oakland and Macomb counties each appointing two and the governor appointing the ninth member. ■ The city would still be responsible for the health care costs of water department retirees, but the authority would be responsible for accrued pension benefits. ■ The plan calls for the creation of a new pension system to cover current employees and those already retired from the department. It would be seeded with a proportional share from the city’s General Retirement System. ■ Creating the authority might require legislation, much like for the Wayne County Airport Authority and Cobo Center.

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WASHINGTON — Oakland County Executive L. Brooks Patterson said the City of Detroit’s current proposal to spin off its water department into a regional authority would probably triple suburban water rates and that he can’t support the proposal in its current form.

“I tell my team no deal is better than a bad deal — and right now it’s a bad deal, so we’re probably going to walk,” Patterson told a crowd of public officials at Governing magazine’s Outlook in the States & Localities conference.

In an interview after a panel discussion at the event, Patterson did not rule out agreeing to a deal if the terms are right, as he once finally agreed to terms for a Cobo Center regional authority after months of opposition.

Detroit emergency manager Kevyn Orr is proposing the Detroit Water and Sewerage Department’s assets be leased by a new independent authority, which would pay the city an average of $47 million per year for 40 years. The new revenue stream would help the city reinvest in public services, including police, fire and blight removal. The water authority serves more than 4 million Michigan residents.

According to a draft version of Orr’s Plan of Adjustment — the restructuring document that must be submitted to the U.S. Bankruptcy Court by March 1 — each county that agrees to the deal would get two seats on the new authority’s board, representation that the counties have craved for years.

Oakland and Macomb county officials have been reluctant to support the framework of Orr’s proposal, while Wayne County Executive Robert Ficano has signaled a willingness to sign on.

The Free Press reported last month that Orr was considering forming a regional authority without Oakland and Macomb as members, if they wouldn’t agree to a deal, according to sources involved in the negotiations.

Regional county leaders have complained about a lack of representation and that Detroit’s problems, including corruption, have infected the system with inefficiencies, ultimately affecting service and rates.

Bill Nowling, Orr’s spokesman, told the Free Press on Tuesday that the current plan addresses “longstanding issues that have been raised by regional officials for decades.” He did not specify which complaints.

Nowling also cited a survey by the University of Michigan’s Gerald R. Ford School of Public Policy showing 79% of local leaders said a top priority of the region should be creation of service-sharing agreements among neighboring communities.

Macomb County Executive Mark Hackel said Tuesday that he still hasn’t seen enough information to commit to a deal yet.

“When it comes to being regional, we want to look at options, but we have to be responsible to the ratepayers and the taxpayers in Macomb County,” he said.

Like Patterson, Hackel said he won’t sign onto a deal without a full vetting.

“It leaves me with no other option than to say we can’t be a part of this because we don’t have enough information,” he said.